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Linc’s $124 Million Deal Highlights Clean Coal’s Eastern Promise

For Linc Energy’s management, the equation was pretty compelling: combine China’s vast reserves of coal with cheap local capital and a potential silver bullet to climate change.

For shareholders who had ascribed little value to Linc’s potential in China, a joint venture with Golden Concord underpinned by the sale of a 5% stake in the company for 120 million Australian dollars (US$124 million), represents an unexpectedly big windfall.

Underground coal gasification—the production of energy by burning coal where it lies, deep below the Earth’s surface—has little profile in Australia but it’s increasingly big business in China where pollution is a burning issue. Thermal coal for use in power stations accounts for two-thirds of China’s energy mix, and the country continues to add the equivalent of the U.K. or France’s entire generating capacity each year.

Linc says Golden Concord will inject US$15 million of working capital into the joint venture, which aims to start building a UCG operation in China within six months of binding legal agreements being signed.

Gas produced through the process will be converted to liquid fuels.

“China’s insatiable appetite for liquid fuels and gas presents Linc Energy and Golden Concord with a unique opportunity to capitalize on this world-changing market,” said Linc CEO Peter Bond in a statement.